The Trump Administration plans in the next few weeks to announce a $1 trillion infrastructure bill, according to Bloomberg and Financial Times. The proposed spending on roads and bridges is seen as a way to further jump start the COVID-19 hobbled U.S. economy.
The money reportedly would be spent over 10 years, but those familiar with the White House thinking say the plan is still “fluid and could take time.”
It also would go head-to-head with not only a sizable Democratic highway bill now before a House subcommittee, but also a GOP version that cleared the Senate last summer.
Mapping out more funding: The last time infrastructure talks were conducted was a $2 trillion effort last year, but that effort went off track when the White House balked at working with Democrats who were pursuing his impeachment.
Now, with the country facing a record $25 trillion debt, Trump also is facing increasing opposition from his own party. Some Senate Republicans say the White House’s expected proposal is too rich and would be a heavy lift in Congress.
Across the aisle and Capitol Hill, House Democratic leaders are working on their own surface transportation bill. The House Transportation Committee this week started marking up the proposal, priced at around $500 billion over five years, with some members participating online.
That’s substantially more expensive than the Senate’s $287 billion highway bill that last July unanimously cleared that chamber’s Senate Environment and Public Works Committee.
The House’s 864-page highway bill also could grow even more, both in size and dollars. By late June 16, the House committee had introduced 257 amendments to the measure.
Political, practical and pandemic positions: Expect the usual ideological arguments during any upcoming infrastructure bill debate, which needs to be wrapped up before the current funding expires on Sept. 30.
Democrats want more and stronger greenhouse gas emission rules and more money for rail and other mass transit. Republicans priorities include incorporating technology to improve infrastructure and addressing the transportation needs of rural communities.
But both sides agree that attention needs to be paid to the long-term sustainability of the Highway Trust Fund. A key purpose of this fund, with separate accounts for highways and mass transit, is to help pay some of the cost of highway and mass transit programs through federal grants to state and local governments.
The federal money is particularly important now for state and local governments that have seen the coronavirus pandemic gut their tax revenues. The House bill takes that unexpected fiscal hit into account, providing $83.1 billion in fiscal year 2021 to struggling local transportation agencies.
Federal gas tax time again: Most of the Highway Trust Fund’s revenue — 84 percent — comes from the federal excise taxes on gasoline and diesel fuels. The remaining money for the fund is from a sales tax on tractors and heavy trucks, an excise tax on tires for heavy vehicles and an annual use tax on those vehicles.
With the need growing greater every year for road, rail, bridge and other public infrastructure repairs, combined with the jobs such projects could provide during this now official economic recession, some bargaining and concessions are expected
Could that mean we might finally see a hike in the federal excise tax rates on fuels? I say finally because these federal levies — 18.4 cents per gallon on gasoline and 24.4 cents per gallon for diesel — have not changed since 1993.
If tax rates had been indexed for inflation since 1993, the current tax on gasoline would be about 33 cents per gallon and the tax on diesel fuel would be about 44 cents per gallon.
To make up for the excise tax shortfalls, past Congresses have opted to cover highway spending by transferring money to the Highway Trust Fund from general revenue. The most recent money shifting was $70 billion authorized in the 2015 Fixing America’s Surface Transportation (FAST) Act.
The current federal fuels excise tax rates are in place through September 2022, but as gas prices have dropped, some lawmakers and lobbyists are pushing to bump up the taxes now. Trump himself has previously said he wouldn’t be opposed to a gas tax increase.
States, most of which don’t have the luxury of carrying a budget deficit or juggling accounts like their federal counterparts, aren’t as opposed to transportation taxes. Last year, for example, 14 states increased their fuel taxes. Earlier this year, 4 more were considering such hikes.
Is that White House support, coupled with a need to fund job-producing work enough to get Congress to act? Or is even a relatively small excise tax hike too much to consider in an election year?
If we finally get to infrastructure week, I guess anything is possible.
You also might find these items of interest:
- 4 states considering gas tax hikes
- When did your state adopt its gasoline tax?
- How states deal with gas tax hikes and the potential for, finally, a federal increase (Sept. 6, 2019)
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